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Don’t sweat the six figures, worry about the big bucks: Cohn

What does a top public servant truly deserve as hospital chief, university president or head of a hydro utility? Where do $500,000 salaries come from?

Today’s $100,000 cut-off for the Sunshine List would have been worth a mere $71,000 at the time former premier Mike Harris passed the law in 1996, but even the tough-talking Tory premier considered that too low, writes Martin Regg Cohn. (Carlos Osorio / Toronto Star file photo)

Salary pornography is an annual rite in Ontario: The government of the day releases its Sunshine List of high-flyers earning hundreds of thousands of dollars a year, and the fat cats are reduced to mincemeat by a voyeuristic media.

But nothing ever changes. The big public sector salaries never seem to shrink, nor get a rethink.

Now, bending to opposition pressure and the perennial media pummelling, the Liberal government is promising to go beyond mere salary disclosure. A new law passed by the legislature this month will examine not just who earns big money, but why?

What does a top public servant truly deserve as hospital chief, university president or head of a hydro utility? Where do $500,000 salaries come from, and why do some high-flyers earn as much as $1.5 million when our elected premier is paid the princely sum of $212,000 a year?

The idea of salary caps — and a close examination of what top jobs are really worth on the public payroll — is long overdue. But can government get it right at a time when executive compensation is soaring to obscene levels?

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Nearly two decades ago, the Progressive Conservative government of Mike Harris announced a Sunshine List that had the effect of naming (and shaming) anyone on the public payroll earning six figures. But unveiling salaries isn’t the same as unpacking what goes into them.

Over the years, no amount of sunshine has stopped salaries from mushrooming. In 2010, the government imposed a freeze on non-unionized staff, but at the top end of the scale the effect was merely to freeze the fat cats in place.

Another problem: Updated for inflation, $100,000 in 1996 would be worth about $141,000 today — but the threshold hasn’t been updated since then. Put another way, today’s $100,000 cut-off would have been worth a mere $71,000 at the time Harris passed the law in 1996, but even the tough-talking Tory premier considered that too low.

The result has been a five-fold explosion in the Sunshine List: it now captures school principals and university teachers earning just above $100,000, while obscuring the more troubling trend of rampant compensation inflation for top executives.

Starting next year, the new law promises to look at pay caps for supervisory staff at the executive level. It will also cast a wider net for government-funded agencies whose handsomely paid CEOs have hit the headlines over the years — ORNGE (nearly $2 million), OPG ($1.8 million), University Health Network ($754,000), and Cancer Care Ontario ($497,000).

But what’s the true value of a chief executive or vice-president? The new law doesn’t say, and the devil will be in the details.

The opposition New Democrats have long targeted excessive hospital salaries, arguing that they should be capped at twice the premier’s salary, or about $424,000 a year. After all, hospital CEOs are at lower risk of being poached the way mutual fund managers might be snatched by competing banks — and surely they are more motivated by the rewards of public service and helping the sick than the average banker.

That said, what about the bond traders who work for the Ontario Financing Authority — whose CEO has earned $559,000 in recent years? Aren’t they more likely to be snapped up by the big banks?

Unquestionably yes. But does that mean we should pay them as much for public service as the private banks? It’s hard to see why or how the dubious metrics of the private sector should be applied to public service and public-spirited CEOs.

Even at the risk of higher staff turnover, the public sector offers opportunities for public purpose and personal advancement that the private sector cannot begin to offer. Yet too often the board of directors of a government-funded agency or hospital is influenced by the mentality of board members who travel in the rarefied world of corporate skyscrapers, where lavish compensation bears little relation to true job performance metrics.

If the government’s proposed compensation framework worships anew at the altar of private sector deities, confusing them with public service duties, the new law will have achieved nothing.

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